SANTIAGO, May 30 (Reuters) - Output at the world’s No. 1 copper producer, Chile’s Corporacion Nacional del Cobre , slipped slightly in the first quarter and its profit dived as metal prices fell and ore grades deteriorated, the state-owned miner said on Friday.

Codelco, as the company is commonly known, posted a 0.3 percent drop in copper production to 383,000 tonnes in the quarter, while its pretax profit fell 38 percent to $539 million.

Copper prices in the January to end-March period were an average 11 percent lower than in the same quarter the year before.

Because Codelco hands the money it makes over to the state, falling profits essentially mean less money for Chile’s government at a time when citizens are clamoring for improved education, health care and pensions.

In explaining its quarterly results, the company pointed to problems it faces at its older deposits such as lower ore grades, harder rock, and trickier production at greater depths.

To combat declining copper output, Codelco has brought some new deposits, such as its Ministro Hales mine, on stream.

But the company is facing headwinds with controversial plans for a $6.8 billion expansion of its massive Andina mine near the Chilean capital of Santiago, a development that the company has said is key for its future.

Factoring in the miner’s minority stakes in the El Abra and Anglo Sur deposits, total production for the first quarter was flat at 428,000 tonnes. (Reporting by Fabian Cambero; Writing by Anthony Esposito; Editing by Franklin Paul; and Peter Galloway)